MMR Mcmoran Exploration – A Case Study In Technical Analysis And Patience

by Olivier on February 10, 2010

As much as I’d like to come up with great stuff on a daily basis the markets do not work that way. There are times where it is best to sit on your hands and simply watch how things develop. I’ve learned a lot of lessons the hard way. I guess every seasoned trader has his fair share of scars to show for. Probably the most important lesson I’ve learned is that capital preservation is key. That’s because long-term survival is the name of the game. Big losses take a long time to recover from and the effort required eats up a lot of precious energy. That should remind you of the importance of Mental Capital, Dennis Gartman rule number 3, something novice traders tend to easily forget about.

The markets are not generating the kind of opportunities I am typically looking for. That’s why I am sticking to my conservative approach and keeping my overall market exposure to a minimum. It’s the perfect time to analyze stuff and watch pressure build in various charts. It is also a great time to watch how different stocks within various sectors behave. I try to get to know their personality and I try to identify early leaders. I also closely try to identify which ones are showing relative strength compared to their peers.

MMR – Mcmoran Exploration is a stock I’ve already mentioned a few times. One reason I did so is because I believe the stock might offer a great entry in the next few weeks. Technically speaking the abnormal and above average volume spike, the ensuing thrusting move and the break-away gap are indicative of a high odds play. As mentioned in the title of the post patience is key. I am patiently watching the stock develop pattern pressure. I am monitoring if it acts well and if volume keeps drying up. Put another way I am watching if the stock is acting like I would expect a strong stock to behave during a consolidation before the next move to the upside resumes. So far the pattern looks like an ascending triangle. The pattern could easily morph into a bullish flag or wedge without invalidating the bullish implications.

MMR McMoran Exploration

Up-to-date MMR – Mcmoran Exploration Chart on my public list.

As I’ve stated above I am not looking to be aggressive right now. A notable exception would be MRZ – Mirasol Resources. It is displaying incredible strength and is trading very close to its all time high. If the stock can take out 2.50 I will be looking to further add to my position.

Rule No 1: Never lose money. Rule No 2: Never forget rule No 1. – Warren Buffett

Have a great evening!

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